Literature review

Carcierge is an independent service whose ultimate aim is to provide a convenient, professional,

time and money-saving service that includes everything from refueling, weekly washes, servicing and
maintenance; to all administrative tasks such as registration and insurance renewals, sourcing, buying
and selling, storage, and everything in-between. It is a premium concierge service that completely takes
over every aspect of your car. It is not a repair shop but rather a team of experienced mechanics who
have been handpicked by the Carcierge owners and have been trained to provide exceptional customer
service at every step of the way to the customers.

Moving onto the industry in which Carcierge operates in we can state that the automotive
industry happens to fall under oligopoly competition. A typical oligopoly has several firms with a large
number of products, each competing for a limited number of potential customers. For example, General
Motors (GM) is one of the largest automobile manufacturers in the world, while Ford Motor Company
(F) and Volkswagen AG (VW) are two other major players in this industry. Oligopolies tend to have
similar product ranges, pricing policies, and distribution channels. But their advertising strategies are
often very different in order to appeal to their individual customers. For example, one firm may use
aggressive pricing while another may emphasize quality or service. The general trend has been towards
more sophisticated marketing strategies such as product differentiation, brand loyalty programs and
multiple advertising channels.

The car retail industry has significantly evolved in North America, and this happened roughly
between 2012 and 2017. The industry was known for its poor service, high cost, and complex selling
process. As the world evolves, customers are also moving and looking for easier ways to do things.
Before, customers had to go through the hassle of going through many steps before finally purchasing a
new vehicle, but now customers want services that can be fast and readily focused on their needs. The
car global retail industry has also evolved by introducing flagship stores that showcase the brand where
services are done both physically and online.

The main problem in this industry is that it has been stuck in a cycle of redundant innovation for
decades. Companies have not changed much over the years because they do not want to lose their
customer base or risk losing potential customers due to something as simple as making a mistake.
However, they also need to keep up with new competitors. This leads to the current automotive
industry being ripe for new disruptive changes which can exploit the many gaps where companies have
not innovated. Companies with services like Carcierge come into play in these very gaps and can bring
very financially lucrative year end results if the right set of strategy is used to target the right audience.

The conventional car-buying method had legislative laws that were put in place to protect
automotive retailers. The retailers used a lot of sales representatives, and the process of getting a car
was complicated and included a lot of haggling on price. Their vehicles were displayed in showrooms
where customers followed a sequence of steps to purchase a vehicle. Dealerships were also required to
have licenses. However, the internet revolutionized the way consumers obtained cars by making it
possible to buy them without visiting a dealership. Online dealers made it possible for consumers to
search for cars via the internet, get information about them and actually buy them directly from the
manufacturer through an online auction site like eBay or Gumtree. The new method used a combination
of direct contact between seller and buyer, computers and phones, and the internet. The buyer could
choose from any car that he or she wanted from any dealership in the world using a website or an
application on their mobile phone or tablet computer. They could also arrange for their vehicle to be
delivered directly by the seller without having to visit a dealership first, which is how online car buying
became popular in recent years. This led to many non-conventional services such as Carcierge popping
around the globe. For the non-conventional automotive retailers what mad them different or win a
more significant market share was determined by how hassle-free getting a car is and their marketing
strategies. The non-conventional automotive retailers have a more competitive advantage than the
conventional because of the latest technology being introduced in the market for the customers. For
example, they used wall monitors, car boutiques, and virtual reality for an even better customer
experience. The goal is to find better ways and technologies to increase their presence online and
through social media so that they can provide the car to the customer in the easiest most hassle-free
way.

Furthermore, no matter how good and innovative a business idea is on paper at the end of the
day it needs to work in the real market and generate profit in order for it to be a finically lucrative one. It
is of great importance for a new business to understand and establish the market potential of the
product offered to its customers. There would be no point in spending money on a product with low
potential (MBA Skool Team, 2021). When looking at the market analysis of the Carcierge based on the
zip code sales data provided in a case by the Company we can see that there were 470 cars sold in a
year. From this, we can infer that Carcierge has excellent market potential. According to the HD, the
number of households with an income higher than US148,000 shows a significant number of people and
potential customers that can be reached out to with proper marketing strategies.

Moreover, less than 1% of active vehicle shoppers in a 2015 Autotrader study found to enjoy the
current automobile purchase process. Dealer profits are modest. In the previous five years, the
average new vehicle gross profit has continuously declined to just $1,144, according to the 2015
National Automobile Dealers Association (NADA) Annual Report, and expensive corporate
branding initiatives are crippled by poor in-store experiences. Furthermore, a case study done be
Deloitte also revealed that “No longer do customers view their retail journeys in an industry-
specific vacuum — they compare the quality of every buying and service experience relative to
every other one, regardless of the product or service in question.”

The way people buy cars has changed, and the way dealers sell cars has changed with it. The
combination of more choices and greater transparency — whether it’s from online retailers or
from brands themselves — has created a disruptive force that is changing how consumers shop
for vehicles and it’s not just about price. Even at the low end of the market, shoppers are
demanding more — including information about reliability, fuel efficiency and overall vehicle
quality. This new reality presents a challenge for dealerships: How do they appeal to this
increasingly sophisticated audience?

Car shoppers are no longer giving dealers a pass simply because that’s the way things have
always been. According to Deloitte, Generation Y shoppers (born 1981-2000) value the purchase
experience three times more than vehicle design. With the twin transformations of shared and
autonomous mobility looming, the last thing dealers need is to alienate themselves from the
largest demographic in U.S. history. This pivotal consumer segment is seeking an experience that
is incompatible with today’s reality.

However, low profitability with this innovative approach is that it can hamper new project
investment – Even though financial statement of these car services is currently stable, but going
forward margins of 5-7% profitability from this business model can lead to shortage of funds to
invest into new projects. In addition, competitors like Tesla, Volvo and Ford have a much better
financial position than the car rental companies. Therefore, they are able to offer more attractive
deals on their vehicles and hence capture a bigger market share. Therefore, the stock price of
these companies might become highly risky at some point of time due to their low profitability
and financial problems.

Moreover, the car industry has been around for more than 100 years. The first cars were built in
the late 1800s and they have evolved over time to become more efficient, affordable and safer. In
recent years, however, the digital players have started to take over the market. They are not only
providing better customer experience with their products but also providing a better
understanding of customer needs by using data analytics techniques. The growing dominance of
digital players such as Amazon, Google, Microsoft etc can reduce the manoeuvring space for
Carcierge and put upward pressure on marketing budget. Moreover, these companies have very
large marketing budgets which can be used to promote their products directly or indirectly
through advertisements on other platforms such as television or social media. Carcierge has not
been able to penetrate this new segment which is heavily influenced by technology based
companies like Amazon or Google. Therefore it will face many challenges going forward if it
wants to stay competitive in this highly competitive market.